Monthly Archives: June 2017

Voices for and against argument that there is an undeclared Emergency gets shriller every year

It is that time of the year — the last week of June — when the Emergency is remembered, various commentators lament the attempt to kill the spirit of the Constitution and others celebrate how the system fought back. Increasingly, the last week of June has also come to entail a discussion on a state of “undeclared Emergency”. The voices for and against the argument that there is an undeclared emergency gets shriller every year.
Some home truths are critical. First, no party in power is innocent of the charge of introducing elements of an “undeclared Emergency”. Be it the Congress-led United Progressive Alliance (UPA) or the Bharatiya Janata Party-led National Democratic Alliance (NDA), every successive government has contributed its share of draconian laws, subversion of Parliament, blasé violation of constitutional principles with law officers finding ingenious arguments to defend them in the courts. Each government builds on the foundation laid or fortified by the earlier government, regardless of political hue. Each Opposition screams against “undeclared Emergencies” and only builds on the foundation when voted into power.
Examples will make this point clear. The UPA effected draconian amendments to the law governing foreign contributions to the social sector that have resulted in foreign-funded non-government organisations (NGOs) being barred from indulging in an ambiguously-and-widely defined “political activity” even while foreign-funded business enterprises face no such restrictions. Corporates with foreign shareholding are free to lobby for changes to law and lobby Members of Parliament and senior bureaucrats, while NGOs with foreign donations simply cannot meet these worthies to influence their thinking and express their points of view. The administration during the NDA government built on this well-laid foundation and started actually knocking NGOs hard.
Likewise with interventions with media businesses or just crony capitalism. Bennett Coleman and Co, the owner of The Times of India, was hounded by the Enforcement Directorate during the United Front government comprising a bunch of 13-odd political parties led by Deve Gowda first and I K Gujral next, followed by the NDA. Tehelka and NDTV can write full primers on what can go wrong when you get on the wrong end of the state machinery. Tehelka’s substantial financier Shankar Sharma faced the music under both regimes — the NDA and the UPA (the allegations for which his broking firm had been punished in 2001 were levelled again to punish him personally, this time under the UPA). The Vedanta Group came in for serious stick under the UPA. Cairn India was forced to apply for approval for a change of ownership, and then given approval with the condition that substantive litigation against the government must be withdrawn.
Second, a government in power has to be really very stupid to formally use the E-word and declare a state of emergency. It can now do so only if it were to entirely lose all faith in the democratic system to come to believe that it would get away with it. Indira Gandhi’s declaration of Emergency fell in the former category. Her termination of the Emergency showed that she too had not lost faith entirely and by the time she realised her cronies had gone too far, it was really late. Today, with the love and glory for the armed forces being felt so widely, as a society we may be heading towards a tipping point towards the latter — a loss of faith in democratic politics. However, no politician who has a decent career would have the capacity to come out the closet and declare an Emergency by design.
The situation is much like the discourse and debate in Israel, where awareness of discrimination under Hitler’s Germany is always highlighted in the incessant debate over the “undeclared apartheid” against Palestinians. It would be stupid for Israel to embrace the epithet of “apartheid” and therefore, it would always highlight how apartheid in South Africa was different in vital features from the discrimination in Israel. Our social debate on “undeclared Emergency” is quite similar. One can keep pointing out that there is no official censor to review news reports, but others can point out that when the situation does not demand an official censor, you do not need to appoint one. The actions of the “Censor Board”, as the film certification board has come to be known, are adequate pointers to the social state.
Finally, as a society, Indians have always craved for a dictator they can elect. Ruthlessness has always been an admired trait in large sections of the Indian electorate and society. Indira Gandhi was popular in her day. The PM in office is as popular today. Their decisiveness and sense of direction is a matter of envy of the other politicians and pride for the layman. Therefore, it is not at all really necessary for a formal declaration of emergency. You can blame Indira’s indiscretion on being blinded by her cronies — astrologers and Sanjay Gandhi’s disjointed blokes and being cut off from ground realities. Let us remember that it was not the feeling of constitutional injury that led to her downfall right after Emergency — it was the forced nasbandi by population-control vigilantes that led to the disaffection of the masses. The government that succeeded her was as draconian — a simple example of trying to arrest a former PM without even a warrant should do to make the point. Morarji Desai had sought to put down the Maharashtra movement in the Bombay Presidency with a firm hand — directing firing on protestors.
Perhaps a more honest way to handle this debate is or all to acknowledge by saying, “We are like that only.”This column was published “Without Contempt” in the Business Standard edition dated June 29, 2017

Last week, India’s media was abuzz with reports of a meeting that did not take place — the one between officials of the Ministry of Finance and members of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI). Around the same time, the sacked chief of the United States’ Federal Bureau of Investigation deposed with candour about his interactions with US President Donald Trump, in the midst of a probe into whether the latter had obstructed justice.

Both the events point to one question: What level of intervention by the “government” is acceptable in the functioning of governmental institutions that have their own institutional governance mechanisms? For many, the point of discussion itself is meaningless: To their minds, once an institution is “governmental”, the government in office has every right to dictate terms on how to “govern”. If you believe in that approach, feel free to stop reading further. If not, remember this is an issue even more critical for India than for the United States. Here’s why.

Most Indian economic legislation — the Acts that led to setting up regulators for the capital markets, insurance sector, pension funds or telecommunications and airports, and so on — have specific provisions that enable the central government to issue directions on matters of policy to regulators. If more than one view is possible on what constitutes “policy”, the government’s view is final. For many policy wonks, such a legal position is adequate for the government to have an unconditional say in the running of a regulatory or investigative institution.

Indeed, when controversy over interference erupts, government servants usually point to these provisions. Worse, potentially diabolically, it is usually pointed out that in fact government records have no evidence of these provisions being actually put to use. Indeed, there is even a reluctance to use these powers formally. For example, when the finance ministry could have issued policy directions to the regulators of the capital markets and the insurance sector to resolve their differences over how to regulate unit-linked insurance plans that appeared to have features of both insurance policies and mutual funds, the finance ministry instead asked the regulators to litigate. Formal use of the policy-direction power requires taking a stance in writing and exposing the decision to accountability in the form of judicial and academic review. Informally, the clubby-chummy world of “moral suasion” enables unbridled intervention and “guidance” with no statutory accountability involved.

This is the context in which traditional central bankers were chafing at the very mention of the idea of setting up a MPC — where nominees of the finance ministry would engage in discussion with central bankers — although the central bank would have the last word thanks to a casting vote of the RBI governor. The finance ministry’s thinking in wanting to meet the committee members points to the central problem with governance in India, whether it is corporate governance or statutory governance. When a governance system entails representation in the form of people trusted by the nominating authority being appointed to a forum, it would not follow that the nominee is a postman or a spokesman at the forum for the nominating authority. She is not meant to be a messenger or agent, who is to carry out instructions of the nominating authority.

For example, once a director is nominated by a shareholder to the board of directors of a company, the director has to play her statutory role in the governance of the company. If the fact that she is a shareholder-nominee were to be a licence for the nominating shareholder to dictate terms to her and to the board where she sits on how business must be conducted, not only the very office of the director but also the entire forum of governance, that is, the board of directors, stands eroded. They would be rendered as rubber stamps in reality and office-bearers only on paper.

It would be akin to the mob’s view in “people’s rule” (yes, that sounds Maoist) prevailing over the rule by those voted to power, because it is the people who voted them to power and the mob belongs to the people. It is this principle that led the United Kingdom’s Supreme Court’s ruling in the Brexit case, too. It was for Parliament to take a decision and pass a law on leaving the European Union and not say that it had no role on the premise that the people had spoken through a referendum. Identical is the case with a gay marriage plebiscite in Australia, where wary of popular reaction either way, members of parliament sought to wash their hands of the matter and sit on the fence by referring the question to a plebiscite.

Instituting the MPC with governmental representation does not mean the government can tell the committee what it must do. Having chosen them, it is for committee members to function and take independent decisions of their own volition. Indeed, there is one very important element in all this: Such a nuanced governance narrative could push underground, the influencing of the committee members by the government. Instead of openly seeking meetings, these discussions would be pushed to the sidelines of think-tank discussions, the cocktail circuit and the drawing rooms of those influential in the lobby.

However, the potential abuse of rightful conduct of governance does not mean that right governance systems should themselves get shunned. It is for transparency systems such as the law on right to information, or parliamentary oversight (indeed that is what led to the deposition in the United States) to keep in check abusive underground activity in governing a nation.

This column was published in the Business Standard’s edition dated June 15, 2017 under the title Without Contempt